Warner Music Pitches Music Tax To Universities: You Pay, We Stop Suing

from the pay-us-not-to-sue dept

Back in March, we noted that Warner Music Group had hired Jim Griffin, a music industry guy who has been pushing the concept of a "blanket license" for file sharing. The idea would be to get various ISPs to simply add an additional fee to everyone's internet access, have that money go into a pool that the recording industry would be responsible for paying out -- and then let people have free reign for file sharing. This is a bad idea for a variety of reasons. It's basically a music tax -- allowing the record industry to be lazy. Someone else gets to go out and collect all this money and hand it over to the industry to distribute (or, actually, not distribute). It effectively sets the business model of the recording industry in stone, and harms better, more innovative business models by inserting the recording industry (and not the musicians) into a role where they don't belong.

We hadn't heard much about this music tax lately, but apparently Griffin has been focused on getting universities to buy into the plan first. An anonymous reader passed on some details, saying that Columbia, Stanford, University of Chicago, University of Washington, MIT, University of Colorado, University of Michigan, Cornell, Penn State, University of California at Berkeley and University of Virginia have expressed interest and talks are under way. A basic presentation that's being given to these universities is below (if you're reading via another site, click through to see it):

There's obviously something appealing about ending the lawsuits and letting people file share freely. But, it's quite problematic to add an effective "tax" when none is necessary. Plenty of other business models, such as those we've outlined here and elsewhere can suffice to fund the creation of music. On top of that, giving the proceeds of this tax to the very industry that has so badly mismanaged musicians for so many years is a travesty -- sort of like bailing out the failed auto industry or banking industry. The presentation says that a nonprofit has been set up to handle the money, claiming that it's "to be clear we intend to operate with good intentions and not profit as a motive," but given the way the industry has acted in the past, that's difficult to take at face value. Also, this isn't really a license. It's a "covenant not to sue" -- meaning that lawsuits could still result.

Of course, while the introduction frames this as a "voluntary" blanket licensing program, the presentation also mentions that they'll need some way to get all ISPs and universities to buy into the plan, or they'll have to work out a way to "avoid massive leakage." So, basically, it's not voluntary at all. It's either join, or get saddled with significant limitations. In other words: all ISPs and universities need to agree to pay a huge tax to the very industry that hasn't been able to adapt, and then trust them to distribute the funds fairly.

Update: Warner Music got in touch and sent us a statement concerning this presentation from Jim Griffin:

"This presentation belongs to someone outside our company and represents
that individual's interpretation of issues discussed at meetings held
several months ago. It was not made by me or anyone at Warner Music
Group. Of course, we are actively engaged with universities and other
parties to seek a constructive resolution to a complex issue - how to
assure artists appropriate compensation while enabling the widespread
dissemination of their work among fans. Therefore, we are undertaking
an effort to develop new voluntary business models that seek something
other than - and we believe, better than - a litigation-based approach.
This is exactly the type of solution that several universities and their
associations have been asking for. We recognize that there are many
different potential solutions to this issue, and we are determined to
continue to think creatively and cooperatively with other parties in
order to find the best ones. At this early stage, many ideas may be
discussed and discarded, but efforts to prematurely label or criticize
the process only hinder achievement of constructive solutions."

Re: Extortion

Ah, missed the part of the slide that said all majors and an indie label are involved - but that's obviously not all independents (who also would not be receiving any of the money from this).

Anyway, my point is that this is likely being sold to the universities simply as something to "stop the lawsuits and DMCA requests" when it obviously will not do so, unless you can get every single content creator past, present, and future in the world agreeing to it.

extortion?

This is ridiculous. The fact that so many colleges and universities are actually interested in this program annoys me. It's a proven fact that a large percentage of people (like myself), might here an mp3 from a friend and buy the entire album (or a couple of singles) if they like them. Personally I use iTunes but I'm stuck with the damn DRM - it's still a better solution then CDs - and btw - do you know anyone that buys CDs? I haven't bought 1 in like 3 years. It's a dead format. They have to understand that if they shut up they would actually get more sales then they loose. They just have to work with more content delivery companies like Apple (iTunes), and Amazon. Dinosaurs shouldn't be rewarded because of their stupidity.

I don't think it's extortion or about sales. It's about keeping the middle man in business.

Right now the major labels are the gatekeepers of music. I don't believe they'll be needed in the near future. Instead, they'll be replaced with algorithms that lead you from one song or video to the next.

The middle-men whose job is to select, promote, copy, and distribute music won't be needed. You can't expect them to take that lying down. Not when we've made them rich in the first place.

Re: extortion?

Good point, Vinod. I was in a record store today for the first time in 5 years. Every time one of my kids picked up a CD all I could think about was "We'll just end up ripping this to MP3s as soon as we unwrap it. How inefficient is that? I hope they don't have some lame form of copy protection on these discs, that would add an extra 5 or 10 minutes to the ripping process."

get on board with the SHIP act

Since the **AA's and the politicians are so fond of acronyms. Let's call it the 'SHIP ACT' for (Safe Harbor Internet Protocol) A person pays x amount of dollars a month (call it $5.00 for music or $15.00 for music and movies. or $20.00 for music, movies, ebooks and software) said person will then be able to log on to a server and download whatever they want (with no DRM). No pay, no access....

As a bonus - if the person helps re-distribute the work, they get a partial credit on their bill for their time and bandwidth.

All copyrighted works will be included because this would be a federal law and therefore override all contracts and distribution agreements.

This is, of course, only valid in the United States of Fantasyland, because the content owners (not to mention the cable and satellite companies that love to sell you everything piecemeal hence five-and-ten dollaring you to death) would never let such open and consumer-friendly legislation see the light of day.

retail music sales will die, itunes notwithstanding. so, the middleman sucks, but that's a strawman: what about musicians? how do they make money? ad-supported is a trickle, even without the middleman. even for a popular band it won't pay for the rehearsal space.

the value of music shouldn't be defined by the value of eyeballs just because technology killed the retail model.

Re:

"better, more innovative" you say? ad-supported? that's innovative?

Huh? Who said anything about ad supported? Click on the links and see much better, more innovative business models that aren't "ad supported" and earned the musicians much more money than they made in the traditional way.

retail music sales will die, itunes notwithstanding. so, the middleman sucks, but that's a strawman: what about musicians? how do they make money? ad-supported is a trickle, even without the middleman. even for a popular band it won't pay for the rehearsal space.

Why do you repeat this claim that it's ad supported? Who said anything about ads?

Re: Re:

Mike, my apologies, I assumed you were talking about ad-supported distribution, and followed the links only after posting the comment. Having read them now I buy one but not the other.

The first "model", from Trent Reznor, isn't particularly useful, as several commenters pointed out. It boils down to:

1. Let a giant multinational spend millions of dollars on marketing to turn you into a star
2. Give away music to maintain demand for the lucrative touring business that only exists because of step 1.

Works great for Radiohead too with "pay what you want." Not so useful for anyone who isn't already a star.

The second model, involving fan "sponsorship," is definitely more promising, and I know a few indie artists who have attempted it. In my experience they can cover their recording costs and that's about it. I haven't seen any musician make a living that way.

I believe musicians should be able to make a living. I'm not saying every wannabe with a guitar should get free rent, but the ones who really dedicate to their craft and build their fanbase should be able to afford an apartment and health insurance, for god's sake. I've been in music circles for over fifteen years and right now, the musicians I know - the indie ones, not the major label ones - have been really hurt by the disappearance of CD sales as a reliable source of revenue.

Re: Re: Re:

The first "model", from Trent Reznor, isn't particularly useful, as several commenters pointed out. It boils down to:

1. Let a giant multinational spend millions of dollars on marketing to turn you into a star
2. Give away music to maintain demand for the lucrative touring business that only exists because of step 1.

That's simply not true either. We've pointed to plenty of "less well known" bands that have made very similar business models and it worked for them.

Works great for Radiohead too with "pay what you want." Not so useful for anyone who isn't already a star.

As we've been clear (again, you seem to be suggesting we're saying something we haven't) we don't support the "give it away and pray" model. But that's NOT what Reznor has done (it is what Radiohead did). Reznor offered a variety of *scarce* goods for sale, and knew that the free music would make those more valuable. That's a great business model and it works for small bands as well as big bands.

Smaller bands can give away their music to build up a good following, that will pay for concerts and other "scarcities" such as access to the band.

The second model, involving fan "sponsorship," is definitely more promising, and I know a few indie artists who have attempted it. In my experience they can cover their recording costs and that's about it. I haven't seen any musician make a living that way.

Then you should look more. :) Jill Sobule made the $70k she set out to make in a little over a month. She didn't need all of that to record the album, so there was some profit baked in, and then she ends up making good money on touring in addition.

The band Marillion has used the sponsorship model for years to support them and it's worked great.

I believe musicians should be able to make a living. I'm not saying every wannabe with a guitar should get free rent, but the ones who really dedicate to their craft and build their fanbase should be able to afford an apartment and health insurance, for god's sake.

And, uh, who exactly is saying anything different?!? We've shown that the models we talk about have helped bands make MORE MONEY than in the past.

I've been in music circles for over fifteen years and right now, the musicians I know - the indie ones, not the major label ones - have been really hurt by the disappearance of CD sales as a reliable source of revenue.

Sure. If they relied on CD sales then that's what they get. Because they didn't adapt to the changing market. Yet, as we've seen time and time again, the musicians who HAVE adapted, have been able to profit nicely.

I'm releasing a song

Some of the money better start flowing in my direction. I'll set up a botnet to make sure it gets plenty of download activity. It'll be one of the most popular files ever. Then I'll just release a new one every few months and wait for the money to start rolling in.

Re: I'm releasing a song

Re: amass a pot of money

Re: extortion?

Thats actually becoming a problem for the CD distributors because retailers have realized that nobody is buying CDs anymore. They've decided to use the display space for more profitable items such as TOASTERS that can't be moved around the internet like music can.

I give the big labels 3 years before they are non-existent. You can tell from the power-point that they are seriously struggling. And NO they won't get a bailout package either!

"Artificial scarcity" is why the (U.S.) economy works. It's why your dollar has value. It's why the federal government "artificially" restricts the amount of cash circulated and why they throw you in jail if you make use of "technology" to make this resource "infinite". If the government were to embrace the business model you espouse, the U.S. (perhaps the world) would collapse. That's not an exaggeration.

Question: Do you think people should who distribute music/video games/etc of other people should be prosecuted? Mind you, a EULA contract of most electronic media says you cannot freely distribute it.

Who says they have to make money?

Who says that being a musician or indeed any kind of artist means that you have to be able to make a living doing it? Long ago, artists and musicians had PATRONS - people who wanted their art for themselves or the village, or who wanted to hear their music. So they (the patron) paid the musician or artist.

People throughout the ages have gotten bored quickly - so musicians and artists had to continuously create new works. If the patron didn't like it, they didn't get paid.

If something was really popular, some other musician might have overheard it, and agreed to play it - but at a lower rate. Now the musician who created it got irked because his income was being cut into. So someone, somewhere, decided to give the creator - the first guy - a COPYRIGHT. He had the right to determine who got to make or produce or perform copies of his work. He was given this right so he could make some money to offset his costs of production, make some money, and to promote him to CREATE NEW WORKS because his copyright was of limited duration - so he'd have to continue to create if he wanted to continue making money. We as the society traded him a brief monopoly in exchange for his creative genius eventually becoming available to everyone after a while...

Fast forward to the day of records, etc. and now you have some schmuck that came up with a way to sell copies of the work to multiple people. The musician didn't have a way to reproduce the records/tapes/CD's on his/her own because that equipment was expensive. So he gave a cut of the sales to the guy who had that equipment. But you still had a problem of "marketing" this stuff that was produced.

So someone else got into it and agreed to front the $$$ to market the items in exchange for a cut + his money back...

Pretty soon, due to 'funny accounting' the costs look pretty high, and the musician is making next to nothing. Also, with the high costs of equipment, shipping, and marketing - you had a reason to 'extend' the amount of time that the copyright was in existence. Everyone had costs, everyone had to make their $$$ back, and the works still entered the public domain - eventually - right?

That was ok, when it went from 7 years to 14 years then to 20 years. 99 years is insane - most people don't live to 100, so any work created in someone's lifetime OUTLIVES them! In fact it outlives most of the public that it's destined to benefit. This is sheer and utter lunacy.

Basically what the RIAA's become is a way for a musician to get a loan at insane rates to produce music.

Finally, from my standpoint - I've bought a lot of Tapes, records, and CD's over my life. Some stuff I've bought more than once in more than one format. Now that I have the capability of reproducing the item in just about whatever format I want, I don't need to keep paying someone else to do it for me. Why's that such a bad thing? OH yeah, because the RIAA doesn't get to make more money on me to buy that which I already own!

I have no qualms about copying, ripping, trading, sharing, or doing whatever the hell I want with music that I've already purchased. If that means that the musician has to go create something new to get some more money coming in, then that's what he's gotta do - that's the DEAL folks. If he can't create enough to make a living, then tough shit - go get a job or start a company or invent something and make some money so you can engage in your hobby of music. Or get some fool to be your PATRON and share the funds with him...

But stop whining about file sharing... If anything - it's FREE MARKETING for you. If your music is good, then people are going to come and buy other products you offer (yep, you'll have to keep creating new ones). If your music is crap, then no one's going to buy your stuff and you'll have to figure something else out.

As a member of the PUBLIC, I demand quid pro quo! We gave you a copyright, we get the goods when it expires... no bullshit. Go create something else already...

What a terrible idea it is to try and discuss possible approaches that perhaps might prove beneficial. The noted universities are obviously traitors to the "music should be free" crowd, and should be castigated and branded as traitors.

There is always middle ground between opposing factions, and it is disheartening to see comments oblivious to this.

OK, Mike, I'm a little late to the party here. I haven't familiarized myself with all the arguments "we" (is that royal?) have been making. But I'm catching up, and I can find a lot to agree with.

I hadn't seen your "Give it away and pray" article, but reading it now, a lot of it makes sense. You have a very practical approach, which I appreciate. Still, I don't think I can agree that the sale of "scarce goods" -- i.e., physical merchandising -- is the solution. Clearly, some creators (notably, as discussed in the thread, many authors) are unable to create spinoff "scarce goods" to fund the production of their "infinite goods." What about them?

This speaks to DG's question - I'm paraphrasing: Why should creators be compensated directly for content? And who, if anyone, gets to decide?

Well, society gets to decide, though its norms and laws. I believe that society is better off if creators are compensated for their infinite goods.

I recognize that this is a quite different, and perhaps less immediately practical, perspective than presuming that "infinite goods" have been irrevocably made un-monetizable by the invention of digital distribution, and just trying to deal with that fact. Nonetheless I'll go ahead and break out the royal "ought": creators *ought* to be paid for the consumption of their creations. It makes for a better society.

Re:

"Artificial scarcity" is why the (U.S.) economy works. It's why your dollar has value. It's why the federal government "artificially" restricts the amount of cash circulated and why they throw you in jail if you make use of "technology" to make this resource "infinite". If the government were to embrace the business model you espouse, the U.S. (perhaps the world) would collapse. That's not an exaggeration.

First of all, a government is not a business and it does not have a "business model." It is not designed for profit.

But, more importantly, I believe you are a bit confused about money and monetary policy, and are confusing it with cash. *Cash* is scarce resource (not artificially scarce, really scarce). Money is also a scarce resource, which is separate from (but related to) cash. Money is built on trust and trade. There is not an infinite supply of money, because money has a natural scarcity in the amount of trust out there (i.e., if you add more money, you just create inflation to rebalance).

So, no. Artificial scarcity is not at all why the economy works.

Question: Do you think people should who distribute music/video games/etc of other people should be prosecuted? Mind you, a EULA contract of most electronic media says you cannot freely distribute it.

There are a lot of issues with that extremely loaded question. Most EULAs are not, in fact, contracts under any REAL terms (a contract involves a negotiation where both parties have the chance to negotiate, adjust terms and agree to the final -- that is not true with an EULA).

But, more importantly, whether or not they CAN be prosecuted is not an interesting question. Whether or not it MAKES SENSE for businesses to prosecute or set up business models where such a question is even asked is a much bigger issue. I think if you've created a business where that question even comes up, you've done a bad job and are asking to be put out of business.

A good business model doesn't require a EULA that tells people they can't do something with content.

"Ruckus avoids copyright infringement through its direct relationship with the record labels, Lawson said. Ruckus has agreements with major labels, such as Warner and EMI, as well as several thousand independent labels."

I will not substantiate my opinion, as it's been covered any time in the last ten years a post about the RIAA comes up: In making this statement, I posit that warner's desire is only to monopolize their music rather than encourage the use of well-developed, mature service which are already in place.

Re:

"I promise not to break your legs if you pay me a bit of money every month. Hope you don't piss me off."
"I promise not to sue your ass off if you pay me a bit of money every month. Hope you don't piss me off."

Re:

I haven't familiarized myself with all the arguments "we" (is that royal?) have been making. But I'm catching up, and I can find a lot to agree with.

It's not a royal we, there are other contributors to the blog and lots of people who participate in the community and help formulate and defend the arguments. Mike's just best at it. :)

You have a very practical approach, which I appreciate. Still, I don't think I can agree that the sale of "scarce goods" -- i.e., physical merchandising -- is the solution. Clearly, some creators (notably, as discussed in the thread, many authors) are unable to create spinoff "scarce goods" to fund the production of their "infinite goods." What about them?

It's important to realize that, while physical goods may be the most obvious scarce goods, they aren't the only or more important scarce goods. Access and reputation are scarce goods. Just about any product is a bundle of scarce and non-scarce goods.

Live music is a good example, for touring musicians.

The most valuable scarcity for creators, however, is their ability to create. That is, to create new content. That takes time and talent. Paying for the creation of new content is a huge opportunity.

Re: Re:

"I promise not to break your legs if you pay me a bit of money every month. Hope you don't piss me off."
"I promise not to sue your ass off if you pay me a bit of money every month. Hope you don't piss me off."

Why is the one with lawyers NOT extortion?"

Because we've been paying them for 50 years. What will they do for food now? Why don't you just pay and pay and pay so that these poor guys can lead a slightly decent life, with a few jets and annual French vacations? They've been ripping you off for a few decades and you guys don't even have any gratitude. What's the world coming to?

Wire

Re:

till, I don't think I can agree that the sale of "scarce goods" -- i.e., physical merchandising -- is the solution.

First of all, it's important to be clear here: scarce goods DOES NOT mean physical merchandise. In fact, I think the best scarce goods tend not to be tangible. They include: access, reputation, ability to create new works and time. None of those are physical goods.

Clearly, some creators (notably, as discussed in the thread, many authors) are unable to create spinoff "scarce goods" to fund the production of their "infinite goods." What about them?

I disagree. There are ALWAYS scarce goods. Not seeing the scarce goods means you need to hire a better business manager.

This speaks to DG's question - I'm paraphrasing: Why should creators be compensated directly for content? And who, if anyone, gets to decide?

Basic economics decides. The law of supply and demand.

Well, society gets to decide, though its norms and laws. I believe that society is better off if creators are compensated for their infinite goods.

I'd rather let the market decide than any individual.

I'll go ahead and break out the royal "ought": creators *ought* to be paid for the consumption of their creations. It makes for a better society.

Why? If the economic evidence showed that by using infinite goods to make scarce goods more valuable, musicians could make MORE MONEY and music fans could listen to MORE MUSIC, pretty much everyone is better off.

So why would you force on the world a situation in which everyone is worse off? How could you say, in good conscience, that such a solution is better for society?

Universities could profit by this

1) Universities record millions of different "ambient music" tracks of bird song, waves on the beach, traffic, etc. etc.
2) They sell this music to each other, and anyone else who wants copies, at cost (say 0.001c per track)
3) Their share of the "blanket license" money, from ISPs, based on sales volumes, is almost 100%.
4) RIAA get almost nothing and die. Universities profit!

A flat fee is already in use... they're called taxes.

"simply add an additional fee to everyone's internet access, have that money go into a pool that the recording industry would be responsible for paying out -- and then let people have free reign for file sharing. This is a bad idea for a variety of reasons. It's basically a music tax"
Explain to us how it's a bad idea.

If done properly, imagine the further growth digital delivery could expand. Imagine a world without DRM. Imagine people not fearing copyright infringement lawsuits because they shared their music, given the person is also paying the "tax".

This "tax" would also open up a new avenue to people who don't download now due to the extortion prices set by stores like iTunes and Amazon. $0.99/song is outrageous and having a "flat tax" means consumers could potentially save thousands by freely downloading music.

Personally, I'm all for it. I would love to be able to download all the songs I want for a small fee. It's a fantastic model and I see no problems with it should it be implemented within reasonable bounds (low cost, unlimited downloads, unrestricted music).

It's no different than paying property taxes which pays for schools (I don't attend), police and fire (I don't use, but feel safe knowing I can).

Explain to us how it's a bad idea, please.

I also don't believe this will hinder innovation at all. Musicians will still have the ability to implement a model based on their needs if they aren't getting compensated by the music industry's plans.

In fact, I believe we'd all see a growth in digital distribution which is no longer bound by the rules of "copyright infringement" due to the "music tax". New sites and software would pop up giving consumers flexibility on how to acquire the music. New MP3 sites would rise, since the restrictions are lifted.

Damn, the more I think about it, the more reasonable it becomes. Encapsulate the movie industry in the same tax, and for the first time ever, the internet does become a place of sharing.

When the average cost of broadband is $50/mo for cable subscribers, I don't see how an additional $10/mo would hurt with the benefit anyone can download anything without fear of prosecution.

I can also see a growth in new potential consumers who will go online to download their favorite song/movie and conceivably be open to buying other products in relation to the song/movie. Damn, the potential is endless.

"But the music/movie industry is running a bad business model to begin with and thus the tax isn't justified."
You know how I can't stand the current business model, but maybe this tax will help them finally move into the future. While I know you don't agree with the tax, I also don't feel we consumers should have to pay for the current model and wait until these industries do move forward.

Because until they do, we'll continue to get bombarded with DRM, legal issues, IP conflicts, and every other damn consumer inconvenience they can think up.

Which is better? A step forward with a "one cost does all" or the continuing fight? I'm sorry, but the "tax" benefits outweigh the current (and continuing for years) situation.

I'd also like to point out in your "freeconomics" discussions regarding the industries that you rarely give them alternatives to which they can distribute freely, but make money elsewhere.

If the overall "product" consumers want is the music and movie, do you really think they'll rush out to buy a limited edition tshirt, CD/DVD, book, or other things? Sure, a few will (based on your article about focusing on the few vs. the all), but will these few actually be strong buyers to continue the industry?

I think not, in this context. It takes sales to generate the content. The movie you purchased today goes into the pool of the current/future movie to be produced.

Take the movie "The Dark Knight". 2nd best in history. Hundreds of millions made. I see another movie in the series coming out and other projects which may now have a "green light" for production due to the sales which may otherwise not have happened.

Think the "few" can support this with the "freeconimics" model? I don't. Not when you're talking millions to make just one movie.

Re:

Authors write stories. Stories are printed into books. Books are scarce goods that, even in the age of the Internet, are still highly in demand. An author (like that Paolo guy) who gives away his stories for free online will see an increased demand for his physical books because he's no longer a name on a shelf, shoulder-to-shoulder with thousands of others, asking us to give him out $10 to have his book sight-unseen.

Re: A flat fee is already in use... they're called taxes.

I have several main counterpoints.

First, note that all of the money from this goes, once again, to the middle men. The creators of all the content you are mentioning generally see pretty much nothing from the people who would be collecting this. So, in effect, this would be simply to line the pockets of those middle men even more. The creators continue to get nothing.

Also, note that this is only the majors. What about all the great indie bands that aren't under these label's tyranny? They get left out in the cold. When they don't even compensate their own members, would you expect them to compensate those that aren't members?

What about deaf people who go to college. They get to pay a tax for something they will never use, and couldn't possibly use.

Also, you said:Personally, I'm all for it. I would love to be able to download all the songs I want for a small fee.
So sign up for Napster or some similar service. A monthly charge and you get to download. There are already plenty of services like this out there, each with their own sets of features and restrictions. Find one that works for you. There is no need to FORCE college students and colleges into this when such services already exist. If they like it, they can already sign up for it. If you don't like their restrictions, complain to them so they know to fight to have them removed.

Schools and other things taxes go to benefit everybody. That money comes from the government and goes to such bodies. This is talking about giving funds to a private industry that has been shown to rip off the people they say they care so much about. Again, do not expect the actual creators to ever see anything.

Because until they do, we'll continue to get bombarded with DRM, legal issues, IP conflicts, and every other damn consumer inconvenience they can think up.
That IS after all their decision to be assholes, isn't it? They are well within their rights and abilities to move forward with technology and adapt. They are the ones who are choosing not to.

If the overall "product" consumers want is the music and movie, do you really think they'll rush out to buy a limited edition tshirt, CD/DVD, book, or other things?
Have you seen anything like this released? ALL true fans do rush to these things. I have bought every single official Nine Inch Nails "Halo". I consider myself a true fan. While I do not buy the super deluxe editions of things, I do buy them all. Also note that his super deluxe edition sold out within a day for his last CD / Halo. That also totaled 3/4 a million dollars just for that version, even not counting the rest of his stuff. Best part, no label to fleece him of most of that!

Take the movie "The Dark Knight". 2nd best in history.
Also one of the most downloaded movies in history.

Encapsulate the movie industry in the same tax, and for the first time ever, the internet does become a place of sharing.
The internet is already a place of communication a sharing. It does not need to become, as it already is. The labels just need to find a way to monetize that without taxing everybody, since not everybody uses said services. Some people use the pay monthly fee download a lot for stuff like Napster. Other people use services like iTunes & Amazon and pay per download. This "tax" is an attempt to regain control and run out all of the competition. It will actually help to restrict their options by forcing a single option on universities.

Also note that it is NOT the universities responsibility to help the RIAA at all. Not one bit. They have no obligation to do so. The RIAA just wants them to think they do.

I also want to note that I personally refuse to buy any CD or anything from any artist that is part of a major label. I want to point to a group called Metsuo. Recently they had a couple songs that were either made for the Max Payne soundtrack, or simply used on the Max Payne soundtrack (I do not know which, but that doesn't matter to me at the moment). The song that started off the credits was awesome. I looked it up online once at home. Found out that they made it. I found their myspace page which had those couple songs on it, as well as a few others. It is a type of techno music. I love it. I really do. Being on myspace I was able to talk to them. I found out that they are independant and not part of a major label. After finding this out, I did buy their 2 "cds" (not produced as a physical copy yet, so does it still count as a cd?) from the Amazon store. Approx 89cents each song for a non-DRMed MP3 at a quality that is good enough for my ears. For 8$ I got all 9 songs they have. I love every one. The price was well worth the value I get from the songs. And I have engaged in a conversation (although over the net) with them. Makes me feel quite warm and fuzzy about them when I love their music so much and I have talked to them. Being included in that movie has highly increased their popularity. I can only imagine how much they have made since then even if they licensed to the movie really cheap. It is a model that does not rely on forced taxes and has worked out quite nicely for them so far.

Re: A flat fee is already in use... they're called taxes.

@twinrova

I actually think I agree with you, up to a point.

I generally believe that Mike and co has the right approach for the music industry, but I surprise myself and find myself considering a "Music Tax" ... because done right it might just give the recording industry just enough rope to hang themselves.

Let's run with the idea of a music tax, but let's make it one collected and enforced by the *government* not by the RIAA. The government also controls which musicians get a cut (which means they actually get the money). The RIAA can be given the position of "advisors".

The RIAA would have difficulty opposing such a plan, since it gives them everything they have ostensibly been lobbying for, but without the control, which they can't admit to being their actual goal.

In return the RIAA would be legally required to stop suing for copyright infringement, put an end to DRM and publicly support free file sharing.

With the RIAA's teeth well and truly pulled, musicians will be free to supplement their gov't subsidy using all the business models described here, and in time as governments come and go and the economy changes it may eventually be possible to phase out what will hopefully then be recognised as a obsolete and unnecessary tax.

Maybe I'm a dreamer, but I know that in diplomacy, just because someone doesn't deserve something, it doesn't mean it can't be in someone else's interest to let them have it (or at least appear to let them have it).

Socialism

Since we Amerikans just elected a socialist for president, we clearly think paying for things other people will get to have is a good idea, so we would probably go for this. Timing really is everything.

Re: Re: A flat fee is already in use... they're called taxes.

"First, note that all of the money from this goes, once again, to the middle men. The creators continue to get nothing."
NOTE: There is a HUGE difference between the artist and the distributor. We're talking distribution, not artists. Granted, this "pool" may not go to the artists, but do not forget most labels pre-pay on the basis of the artist going big.

This "tax" applies to the middlemen who already spend thousands and thousands trying to promote up-and-coming artists.

As for the deaf people, please remember my "tax" would also apply to the movie industry.

"So sign up for Napster or some similar service."
Selection limitations, these services have. With the tax, Napster goes away. With the tax, all would be free.

"They are well within their rights and abilities to move forward with technology and adapt. They are the ones who are choosing not to."
I agree, but as Mike states, it's the current business model they're trying to maintain, and to a point, it makes sense. A very large portion of revenue comes from the physical media they sell. Take these revenues away and there's only two choices left:
1) Create new business models and hope to hell they work.
2) Increase the prices of their other revenue generating lines of businesses.

No offense, but given the prices now, neither "plan" seems like a good idea for consumers.

"I consider myself a true fan."
Of ONE band! Do you see yourself rushing out to buy goods from artists you don't like?
Now imagine trying to manage all these and hoping the "freeconomics" model works to give away music.

Believe me, I'm not defending their practices at distribution, but I do see their end in terms of trying to maintain a business while giving true fans what they want.

"The internet is already a place of communication a sharing."
Post a song on your website that's in copyright and tell the world it's available for free.
See how long "sharing" lasts for you.

Now imagine the "tax" is in place. Now imagine you can now post music of any artist, including those who aren't mainstream but you help to do so by "advertising" them with downloadable music.

"Also note that it is NOT the universities responsibility to help the RIAA at all. Not one bit. They have no obligation to do so. The RIAA just wants them to think they do."
Agreed, but my stance is on a tax of everyone, not just universities.

I know the tax idea won't fly with many readers, but it's still better than what the hell we're dealing with today, which is why you and I don't buy music from major labels.

Doesn't This Mean That Users Of Legal Sites Pay Twice?

Whether it's from a download site like iTunes or Napster, or from an ad supported streaming site like imeem or myspace music (last.fm lost the right to stream Warner artists) - doesn't this mean that users who are legal woul dbe paying twice?

Re: Re: A flat fee is already in use... they're called taxes.

"Let's run with the idea of a music tax, but let's make it one collected and enforced by the *government* not by the RIAA. The government also controls which musicians get a cut (which means they actually get the money). The RIAA can be given the position of "advisors"."

Okay, let's remember we're talking about two distinct issues here: Money to the artist and distributing the songs made by the artists, which is what the industry is trying to control and having difficulty adapting new models for.

Add the gov't to this, and it all goes downhill worse than what the industry does to us today.

Re: Re: Re: A flat fee is already in use... they're called taxes.

With the tax, all would be free.
I am sorry but that sentence is just really really funny to me. No matter how you slice it.

What??? Of ONE band!
Because I mention one band I can now only be a true fan of one band? Thats messed up. Even later in my post I mention how much I love Metsuo (and just bought all music release so far). There are quite a few bands I try to get a lot of stuff from. But if they are on a major label, it will in no way come from any method where the label gets money. I will not give my money to assholes if at all possible. And with music it is quite possible to avoid the labels being the recipients.Do you see yourself rushing out to buy goods from artists you don't like?
Of course not, but I don't see what that has to do with anything. Just because I hate Britney Spears doesn't mean everybody has to. She seems to have plenty of fans.

Selection limitations, these services have. With the tax, Napster goes away.
Would you agree then that this is an extremely anti-competitive monopolistic move? I would definitely call this that. Any sort of method where more money goes to the major people with music seems like another attempt at screwing over the creators as well as all independants. They do not want bands around that aren't paying them money. Also, as the labels wake up to this being an alternative business model, and allow such services to use their music, the selection will increase.

... but do not forget most labels pre-pay on the basis of the artist going big.
Well maybe they need a new business model ;)

Post a song on your website that's in copyright and tell the world it's available for free.
See how long "sharing" lasts for you.
There are plenty of artists that do this already. I don't need to. They are artists that want their music heard by people and not to charge people to hear them when the people don't even know who they are. Even with the case of Nine Inch Nails he released his The Slip CD 100% free online. Just sent an email out to everybody in his mailing list saying "this ones for you guys". He is huge. Tons of people paid anyways. I am one of them. He didn't have to, but he wants people to hear the music. That shows me that he cares. I can say the same for a lot of bands that post up tons of songs on Myspace. It shows that they want me to hear the music, as I can play it unlimited times from their page without ever having to pay.

Now imagine you can now post music of any artist, including those who aren't mainstream but you help to do so by "advertising" them with downloadable music.
Again there are more and more artists these days who allow this without a tax. So I see no point in paying a tax for something that is already the direction things seem to be heading with this industry.

With today's technology it is easier and easier to cut out those major labels and for the artists to create music and get it to those who like it. I think a tax would be limiting their choices and keeping an old shrinking business alive artificially.
Why should they be allowed to collect the tax when so many musicians and movie makers are not part of their group? Those creators make a lot more money without the greedy middlemen. So why pay a tax to the middlemen at all when more and more artists aren't using them?

I agree with you in that it would be sweet to share everything 100% legally in this matter. But I see that as the law needs to be changed, or the companies need to adapt to technology. Not force technology to adapt to them with taxes. Maybe if they actually did represent everybody I might agree. Except that they don't, so I don't.

Deaf

Note on Slide 7

Slide 7 of the presentation seems to indicate that EFF and Public Knowledge support Warner's plan. While I can't speak for EFF, I did want to note that while Public Knowledge generally likes the idea of voluntary collective licenses, we haven't reviewed or endorsed anything from Warner on this issue.

The devil is always in the details, especially on issues like being able to opt out, fair pricing, and the difference between a real license and an agreement not to sue.

SUBSCRIPTION SERVICE?

This is nothing more than a subscription service with no real guarantee of avoiding legal recourse. Yahoo, Real Networks all tried a subscription based service business model.. companies that know how to actually create a successful business model in this day and age... and they could not pull it off. Now you steal that idea repackage it with your bullshit and you wonder why the music industry is failing?

Believe it or not the only reason you have the government on your side is because Intellectual Properties are the only exports America has left. Steel is bought from Korea cars are bought from japan... Here's an idea... subsidize free full featured MP3 Players that allows them to buy music from the RIAA directly using an iTunes like interface and put your own DRM... no one can btich cause they can get YOUR basic model DRM enabled music player for free.. they just have to pay for the music 'license' if they want to hear the music. pay to play is the only real way for artists to get their money. the sampling bullshit ascap does is noting more than a mathematicians best guess and in reality its not fair to the lower tiered musicians that join those unions.

if MIT and University of Chicago are actually letting you in the door with this lame slide show, i may rethink telling people i went to school there. I might have to lie and start saying Harvard and Northwestern... (any one from Hyde Park reading this please ignore i still want to receive that scholarship money).

Or how about this why dont you have ASCAP go down to the CTA stations in chicago with a can of vasoline and rape the musicians playing their instruments without a public performance license.

U R A JACKASS and you should consider killing your self.

sincerely,

Broke Scholarship kid that does not want to pay a sanctioned RIAA tax to support MORE failing business models.

Re: Universities could profit by this

Re: Re: Re: A flat fee is already in use... they're called taxes.

Take these revenues away and there's only two choices left:
1) Create new business models and hope to hell they work.
2) Increase the prices of their other revenue generating lines of businesses.

That's not really true. First of all because most mucisians make next to nothing on CD sales (even the big names on major lables). If you cut out the middle men, all that revenue goes straight to the band, so they get closer to 100% instead of 30% or less.

Second, one of the major benefits to the modles Mike talks about is the ability to gain wider exposure. If you get more people paying you, you don't have to raise prices to get the same income. It's noted that not everyone who hears your music will pay you, but even a smaller percentage of a bigger pie is better than the current system.

Do you see yourself rushing out to buy goods from artists you don't like?

I can't imagine you or anyone buys from artists they don't like. So what's your point in asking this question? Are you trying to show how your 'tax' would go to support more bands that no one likes? You think it's a benefit to have more cruddy bands out there?

Re: Re: extortion?

5 to 10 minutes?! What program are you using that's so slow? I go from encumbered hobbled CD to Ogg Vorbis at 16x play speed.

Anyway, I don't think this will work out for the record labels. The list of universities they say are on board with this are all top rated business, law, and engineering schools. The business and law students wouldn't fall for it and the engineering students can hack around it in their sleep. "Nope, sorry guys, no one's been accessing your music, so we're not going to renew the licensing."

Communism for all!

Twinrova, I agree completely, but what stop at music and movies? I think the best thing that this strategy could be applied to is Cuitlacoche. introduce a cuitlacoche tax and everyone gets their fix of black, rancid diseased corn for free at the supermarket! Don't like cuitlacoche? that's ok, it's only about $10.00 a month, and that's a small price to pay to bring infected corn to those who would otherwise have to do without. This has already been put to work in Canada. Canadians pay $0.21 on every blank CD they buy, since everyone knows that CD-Rs are only used to copy music and that no one uses them for anything else ever.

Re: A flat fee is already in use... they're called taxes.

Exactly, someone has got it.
Is paying for electricity a tax ? After all you could hook up to the street lights ?
Paying for music and other creative content in a sensible simple way that gets the money to the creators of the content in a transparent and fair way, which reflects the popularity of their work is a great idea. If some of it goes to the people who finance that work that is hardly unheard of.
With the colloapse of the old model if you want recorded music lets find a way of paying for it, as the old way is in melt down.
As for the freetards do they pay for their internet connection and if so why, surely that is a tax, as any payment seems to be a tax.

I agree

I've been advocating this idea for a very long time, I am glad that somebody finally picked up on my articles and is pushing for it. This should not be a 'university' or 'ISP' tax as such, it should be a tax collected by national governments. I have heard arguments that this discriminates against the culturally-retarded who do not like music, movies and books, however this is no different to how our taxes already discriminates against the wealthy by giving their money out as welfare - it is an established practice worldwide.

The distribution of the money must be controlled by a fair and equitable body who is _not-for-profit_ this is the only way to ensure that the money gets to the artists who deserve it. Those who download music/movies/books should be encouraged to rate them. The distribution of the tax should then be based on the number of individual downloads and the average rating received. Measures would need to be taken to ensure this system wasn't abused, but it is the best guarantee of a fair distribution of profit.

Re: Re: A flat fee is already in use... they're called taxes.

Are you the well known Peter Jenner? If so, we already know that you support such a music tax. It's not difficult to know why. It makes your job a hell of a lot easier, even if it makes life worse for lots of others.

Is paying for electricity a tax ? After all you could hook up to the street lights ?

No, paying for electricity is not a tax, but you pay for your actual usage, and you're paying for a scarce resource.

Paying for music and other creative content in a sensible simple way that gets the money to the creators of the content in a transparent and fair way, which reflects the popularity of their work is a great idea.

Actually, it's not that sensible, nor is it that simple, unless you consider setting up a huge bureaucratic structure either sensible or simple.

It's also not particularly efficient -- and, that's what I'm most concerned about. Why would you want to set up such a system if it's less efficient than other methods, that would allow the musicians you represent to make even more money?

If some of it goes to the people who finance that work that is hardly unheard of.

That's not what's being proposed. What's being proposed is that the people who finance the work CONTROL the money. That's quite different. I'm all for those who finance the work getting paid, but not this way.

With the colloapse of the old model if you want recorded music lets find a way of paying for it, as the old way is in melt down.

Yes, we agree, but it's silly and wrong (or ignorant) to suggest that this is the only solution. We've seen plenty of bands doing just fine with new models that don't require such a bureaucracy. What's wrong with letting them work out?

As for the freetards do they pay for their internet connection and if so why, surely that is a tax, as any payment seems to be a tax.

Well, it's nice to see folks from the music industry really want a "conversation." Calling people "freetards" shows you really don't want to open your mind at all, do you?

It's a tax if it's not voluntary, and this is not voluntary. Hence, it's a tax. This isn't complicated.

Do you actually want to discuss options and business models, or do you want to insult the people who have some ideas that might actually make your musicians more money?

No, the idea isn't terribly unreasonable, it's just too bad it took this long to get there.

I'm sorry if I'm somehow being unreasonable here, but basically this seems OK to me.

If the artist is represented through a recording studio, then the studio distributes the money to the artist. If the artist isn't, then they get paid directly. If artists don't sign with recording companies anymore, as they get enough royalties from their own self-distribution efforts, then recording companies go out of business. If recording companies provide value-added services that artists find reasonable, then they sign with recording companies. Nobody's obsolete business model is propped up--all it does is ensure those whose works are demanded are fairly renumerated.

Sometimes peace is better than absolute victory. In essence, this could mean the end of the copywar over music. Artists get paid, everyone's lives go on. (However, it's too bad that the recording industry didn't consider a solution like this prior to their little 8 year war. But, I suppose, object lessons have to be learned.)

First they ignore you. Then they ridicule you. Then they demonize you. Then they fight you. Then you win.

Yes it's Hamsterdam

The Griffin plan LEGALISES P2P for the students.

Too many people here are typing first before thinking. Do you always get angry when you see the words "music business"? Why are you angry when you are offered legal DRM-free P2P? That isn't a smart reponse.

Give me the LEGAL P2P !

Give me LEGAL FILE SHARING !

@katana "this could mean the end of the copywar over music."

It's a shame that some people just want the war to go on for ever. Vested interests on both sides.

Re: No, the idea isn't terribly unreasonable, it's just too bad it took this long to get there.

You know, that might may kind of almost work, if the people asking for this actually gave money to the artists they represent, and if they actually represented ALL artists.
But neither of those holds true.
So you Have to acknowledge that you would be screwing over every single person who doesn't sign with a label controlling this.
Is that really what you want, to screw over the independants?

What ???

What a terrible idea it is to try and discuss possible approaches that perhaps might prove beneficial. The noted universities are obviously traitors to the "music should be free" crowd, and should be castigated and branded as traitors.

Taxation

I spent a far amount of time reading through these comments and I find that there seems to be a lot of dissent because of the fact that this is a tax (parallels were drawn to internet, cable, and electricity as "taxes" as well). My main problem with this solution comes from the difference between these commodities and taxes. Especially in the case of electricity, water, and heating; one pays specifically for their own usage for the most part. It is accepted that if you use more water your bill will be higher than if you were to use no water at all.

From what I understand, if such a plan were to come into effect, I (who has maybe downloaded/bought three CD's in my life) would be paying the same amount as my friends (some of whom have tens of thousands of songs that they have downloaded). I am well aware that I am not the norm in that I find listening to music or watching movies to be a waste of my time (for the most part) but I am equally certain that most people don't have close to a half of a terabyte of downloaded media on their hard-drive.

I believe that if there were to become an actual tax on music it would have to maintained by some part of the government structure (which most likely will not happen). Therefore, (loaded therefore) I can see no real way that this plan will be accepted by the majority. If it does become of service similar to netflix, subscribers will download unlimited forms of media and find ways to share them with people who are not subscribers. If it does become universal to avoid the aforementioned problem, then it would become an enormous hassle to organize individual programs for media sharing, which would then lead to an overall plan (based off of the mean of internet users). And to this resolution I am forced to question how the billing procedures would come about and whether or not there would become a limitation to the amount of media downloaded.

Back Enzyte in March, we noted that Warner Music Group had hired Jim Griffin, a music industry guy who has been pushing the concept of a "blanket license" for file sharing. The idea would be to get various ISPs to simply add an additional fee to everyone's internet access.